EU Council adopts several VAT measures

On 2 October 2018 the European Council adopted several changes to the VAT legislation.


Quick Fixes

A first directive will implement some short term quick fixes pending the introduction of the definite VAT regime for intracommunity transactions. These quick fixes are:

  • A simplified and uniform treatment for call-off stock arrangements, where a vendor transfers stock to a warehouse at the disposal of a known acquirer in another member state. Such transfers will, at first, not be treated as a supply of goods. If the goods are not sold after 12 months, a taxable transfer of the goods will need to reported. These are just the principles, there are of course a number of conditions to be met.
  • Today a supplier can exempt his intracommunity supply from VAT if the goods are shipped from one member state to another and his customer acts as a taxable person. The new article 138 of the VAT Directive will demand, for this VAT exemption to apply, that the buyer is registered for VAT in another member state than the one where the transport begins, and that he has indicated his supplier with this VAT number.
  • In chain transactions (a sequence of supplies where the goods are shipped only once from the first seller to the last buyer within the chain) the VAT directive will lay down several rules on how to determine in which supply of the chain the goods are shipped. Only this supply can benefit the VAT exemption for intracommunity supplies if the other conditions are met.

In a council regulation, legal certainty will be enhanced on how to prove the transport of goods when applying the VAT exemption for intracommunity supplies. If the supplier can provide certain documents, it shall be presumed that the goods have been shipped from one member state to another.

These four quick fixes will apply as from 1 January 2020.


VAT rates on e-publications

After several years of discussion, the Council also adopted a directive allowing member states to apply reduced, super-reduced or zero VAT rates to electronic publications. This directive will apply from the 20th day following its publication in the official journal of the EU.


Fight against VAT fraud

To combat VAT fraud, the commission has allowed:

  • A temporary measure (until 30 June 2022) allowing member states, under very strict conditions, to introduce a general reverse charge mechanism on domestic supplies of goods and services above a threshold of € 17 500 per transaction.
  • An extension until 30 June 2022 of the so-called sectoral reverse charge mechanism for certain supplies of goods and services susceptible to fraud and of the Quick Reaction Mechanism against VAT fraud (article 199a of the VAT Directive).
  • Further the Council agreed on measures to boost administrative cooperation between the member states to improve the prevention of VAT fraud.

These measures will also apply from the 20th day following its publication in the official journal of the EU (with exception for certain specific measures of the last mentioned directive that will apply from 1 January 2020).

 

Follow our website for upcoming details of our client conference in the beginning of next year where these quick fixes will be further explained.